Challenges can sometimes arise for small business owners when it comes to getting a traditional bank loan for their business. For one, banks, particularly larger ones, sometimes aren’t particularly well-structured for working with small businesses. Also, the process of getting a traditional bank loan can sometimes be a very long and drawn-out one, which can be problematic when a small business owner needs funding for their business quickly.
Consequently, many small businesses may be looking for alternative lending sources. One such source that has been rising in popularity among small businesses in recent times are online lenders. From the fourth quarter of 2012 to the fourth quarter of 2013, borrowing by small businesses from online/alternative lenders rose 175 percent.
Things that some small businesses may find attractive about online borrowing include its accessibility, its speed and its flexibility.
When it comes to any type of loan option for a small business, whether it be a traditional bank loan, online lending or other loans types, it is important for a small business to carefully understand what the terms of the loan would be before taking on the loan and to exercise care to not take out more loans than is manageable. When business loans turn into debt struggles for a small business, a small business can be put into a very tough financial position.
What do you think of the trend of increased online borrowing by small businesses? Do you think the increase in this type of borrowing is having any impacts on the general debt struggle vulnerability of small businesses? What things do you think it is particularly important for small businesses to exercise care with when it comes to borrowing from online lenders?
When a small business experiences debt problems regarding online loans or other types of loans it took out, there are a variety of different options the business’ owners may have for trying to get their business out of the debt trouble. Such options might include Chapter 11 bankruptcy, other bankruptcy options and non-judicial debt relief avenues. Which option would be the best-suited one for a given small business can vary based a range of different things. Bankruptcy attorneys can provide small business owners whose businesses are mired in debt struggles with guidance regarding their options.
Source: New York Post, “Small businesses turning to online lenders,” Catherine Curan, July 25, 2015